If you ever reach the point where you can't work because of an injury, you may wonder what will happen to you and your family. Many people assume that they can simply file for disability benefits through the Social Security Administration (SSA) and be done with it. But you may not be approved. Private disability insurance is an option that can offer what you need in these instances. Here are four reasons to invest in a policy for yourself.
Your Employer Doesn't Offer Them
While it's certainly not required, some employers offer disability benefits to their staff with a percentage of those going so far as to pay the monthly premiums: a nice perk if you have it. These are known as employer-paid plans, and if you're not sure if you're covered, just ask or look at the withholding section on your pay stub. If you see "LTD," that stands for long-term disability, and it means you do have this benefit.
There are also what's known as voluntary plans in which coverage is offered, but the employee has to pay the monthly premiums. According to Forbes, about 40% of employees are enrolled in this kind of plan, and you should find out if you're eligible too.
Unfortunately, the number of employers who offer either of these has bounced around a bit, with the overall numbers decreasing. A lot of business owners are simply being forced to focus on things other than disability due to costs associated with complying with the Affordable Care Act.
If your employer doesn't offer disability benefits at all, you may want to look into getting private insurance for total peace of mind. The average cost of a policy is 1%-3% of your yearly income, but it varies depending on your age, gender, and how much of a monthly payout you would like to receive if you become disabled.
To Cover Illnesses and Injuries
Some people think that most disability claims arise from an injury, whether on the job or at home. But this isn't true. When examining the numbers up close, only 10% of all new claims stem from either an injury or poisoning. Certain health disorders like arthritis and sciatica comprise about 29% of claims, with cancer hovering around 15%. Knowing that you're protected should you become diagnosed with a crippling or terminal disease can be invaluable.
To Receive Temporary Benefits
If you were to become temporarily disabled and incapable of performing your job for only a few months, you wouldn't be eligible to receive benefits from the SSA. Your disability must be expected to last a year or longer. This is where a private insurance plan can help out greatly.
Another advantage to a private plan is that your injury or illness doesn't have to be so bad that you can't work at all. Some policies will cover you if something should prevent you from simply performing your current job. For instance, suppose you work as a paralegal, typing up documents all day. You are diagnosed with carpal tunnel syndrome that requires surgery, and your typing is restricted for three months. Because the disability is temporary and you could find other work that doesn't require typing, you won't qualify for social security benefits. But with the right kind of private disability insurance plan, you can expect to receive payments.
When Social Security Isn't Enough
As of 2016, Social Security disability benefits cap out at $2,639 a month, but that isn't the norm. In fact, you're more likely to get around $700 monthly if you're young. That amount probably isn't enough to support you and sustain a family, so you may need additional income. Most private insurance plans offer more than what you can expect to get from the SSA. For example, a standard plan might stipulate that they will pay around 60% of what your salary is, capping out at $5,000 per month. But you can look into a policy that pays more or less, depending on your expected needs.
Also, what if you apply for disability benefits from the SSA and your claim is denied? Unfortunately, this happens all too often. And according to Forbes, the numbers are on the rise with as many as 60% of all initial applications that come through the door being denied. If you find yourself in this situation, a private disability insurance policy can mean the difference between being stressed and being paid.